The "New German Speed"
Olaf Scholz hopes to massively accelerate the construction of wind turbines as a way to catch up on its climate goals. Photo: Renewable Energy World
As the war in Ukraine progresses and an economic recession looms, EU nations have been forced to reinvent their economic models in order to cut their dependence on authoritarian regimes and dim the effects of the climate crisis. Germany, the EU's largest economy, has taken one of the biggest steps towards these goals.
Germany depends on imports for 95% of its gas consumption, and the war in Ukraine exposed the fragility of the country's natural gas and energy system. German citizens feared gas rationing when cut off by Russian pipelines, but mild winters prevented this from happening. However, Germany's dependence on China for imports has increased since the conflict began. Combined exports and imports with China have exceeded $320 billion dollars, up 21% from 2021. German companies like BASF and Volkswagen have invested in factories in China and depend on the Chinese market for sales. The future of German energy remains uncertain, and the German DAX stock market has dropped 27% last year, twice the fall of the US S&P 500 and the British FTSE.
Chancellor Olaf Scholz addressed the growing concerns this month. He aims to decarbonize the economy, cut down on energy-intensive industries, reduce industrialization, and increase the use of renewable energy to achieve the goal of having 80% of Germany's electricity come from renewable sources by 2030 in what he pledged as a “New German Speed”. Despite this claim, at present, Germany's carbon footprint is nine tonnes per person, 50% higher than that of France, Italy, or Spain.
Although the recently passed climate policy reform shows a willingness by the coalition government to tackle climate change, environmental NGOs have criticized the policy and called it “a sin against all future generations.” The deal aims for a cross-sectoral view in which a sector of the economy can compensate for another sector that misses its target, rather than an annual emissions reduction target for each sector of the economy. This structure may weaken climate action law by taking away the responsibility ministries have for annual climate commitments, but there is a fail-safe in place. If emissions projections for two consecutive years show that reduction goals are to be missed, the government will impose a plan for all sectors to follow.
The deal also imposes a CO2 surcharge on truck tolls starting in 2024, with the revenue set to be used to finance railway development to reduce vehicle emissions. The German government believes that adopting positive climate policy is crucial for the environment and for protecting resources by cutting ties with Russia and China. The deal allows for a new proposal for the EU climate policy, and other nations such as France, Italy, and Spain are expected to follow suit, as each EU member nation must balance the immediate energy crisis, with the increasingly present threat of climate change.
Olaf Scholz speaking to the EU for a push towards a reduction in fossil fuels. Photo: EURACTIV